self storage
Self-storage provides investors with solid cash flow, argues CBRE’s William Gathercole.
  • Some facilities have seen prices increase from $7.5K per square metre to $10K
  • One facility saw unit prices increase by over 35% in just 12 months
  • 2020 financial year saw $300M worth of self-storage transactions

Fuelled by significant growth in e-commerce and shrinking living spaces, self-storage has emerged as a growing part of the industrial and logistics market.

According to CBRE’s Nick Zenonos, over the past twelve-months demand for self-storage facilities has soared, resulting in prices of $7,500 per square metre increasing to over $10,000.

“The low interest rate environment, combined with high rental storage rates, has sparked a shift in consumer attitudes, with more people opting to purchase facilities to meet their increasing storage needs,” Mr Zenonos explained.

He said a recent example of this could be found in the sale of a LEDA Holdings facility in Banksmeadow.  The 9,405sqm facility along Baker Street homes a mix of nine showroom units, 72 self-storage units and 17 warehouse units.

In just twelve months, prices have surged from around $142,500 to $194,750 per unit – over a 35% increase.

“The purchasers have all been owner-occupiers seeking a range of storage solutions, including general home storage, medical storage, archive storage for home-based employment, tools and machinery,” Mr Zenonos said.

“Further to this, during the pandemic period, there has been an uptake in recreational purchases that require greater individual storage needs, such as a second vehicle, boat or jet ski.”

Nick Zenonos, CBRE

Fellow CBRE colleague William Gathercole added that with growth like this, the self-storage market signifies what he describes as a “compelling investment opportunity.”

“Many self-storage properties in Australia are well-located in inner city areas, which provides secure underlying value due to their potential to be converted into alternative uses such as residential, should self-storage demand ever fade,” Mr Gathercole explained.

“Unlike other commercial property sectors, self-storage occupancy agreements don’t commonly feature incentives, which ensures that investors obtain true effective rental cashflow.”

William Gathercole, CBRE

Self-storage has withstood the pandemic, with $300m of self-storage facilities transacted in the 2020 financial year alone. National Storage REIT and Abacus, both considered to be the market leaders in this area, have also purchased 19 and 11 facilities respectively during the same time.

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